Cobalt Market 2024 Year-End Review

2024 cobalt supply and demand trends

Residual oversupply from 2023 prevented any price positivity in the cobalt market through 2024.

According to the US Geological Survey's annual cobalt report, mine supply of the battery metal ballooned in 2023, growing 16.75 percent year-on-year, from 197,000 MT in 2022 to 230,000 MT in 2023.

Over the last three years, annual mine supply has soared, from 142,000 MT to 230,000 MT, up 61 percent.

For 2023, 170,000 MT were mined in the DRC; the African nation is home to the five largest cobalt mines in the world. These high-grade areas have attracted the attention of Chinese mining companies, particularly China Molybdenum (SHA:603993,OTC Pink:CMCLF), which is one of the largest cobalt producers in the DRC and the world.

In recent years, cobalt-mining practices in the DRC have come under fire from international rights groups concerned that artisanal and small-scale cobalt-mining operations are using child labor.

In October 2024, the US Department of International Labor concluded a six year program entitled Combating Child Labor in the Democratic Republic of the Congo’s Cobalt Industry (COTECCO).

Its key achievements include supporting the creation of an inter-ministerial commission to monitor child labor, and setting up a provincial commission in Lualaba. Since its inception in 2018, the project has trained 458 stakeholders from the government, civil society and the private sector on fighting child labor. It has introduced tools like the Bureau of International Labor Affairs' Comply Chain to 28 mining entities in Lualaba and Haut-Katanga.

Additionally, COTECCO has collaborated with the DRC government to establish a Child Labor Monitoring and Remediation System (CLRMS), training 110 officials to operate it. By March 2024, the CLRMS database had registered 5,346 children, and was officially handed over to the mines ministry for sustained management.

Cobalt fundamentals tightly tied to EV sector

Combating child exploitation in the cobalt supply chain will be paramount moving forward, as demand from the EV sector alone is expected to increase substantially, rising by 60 to 70 percent by 2040.

The DRC is projected to play a vital role in supplying the 214,000 MT of cobalt demand expected by 2030.

“It’s hard to understate just how much demand will be added to the cobalt market by the EV industry,” said Roman Aubry, Benchmark Mineral Intelligence pricing analyst, in an April email.

“Already it has become the largest demand sector, and its dominance is only set to grow.”

In 2024, global EV sales reached a third consecutive record high, with China leading the surge. The China Association of Automobile Manufacturers reported a 5.3 percent increase in passenger vehicle sales, totaling 23.1 million units, with EVs and hybrids accounting for 47.2 percent of the market — a 40.7 percent rise from the previous year.

Elon Musk's Tesla (NASDAQ:TSLA), a dominant player in the EV sector, experienced a 1.1 percent decline in worldwide sales, delivering 1.79 million vehicles compared to 1.81 million in 2023.

This downturn was attributed to increased competition and market saturation.

However, other automakers reported significant growth. General Motors (NYSE:GM), for instance, achieved a 50 percent increase in its Q4 EV sales, driven by models like the Chevrolet Equinox EV SUV.

Analysts suggest that while Tesla's sales dip impacted overall market perceptions, the broader EV market remained robust, with traditional manufacturers gaining traction.

Another notable development in the EV sector in 2024 was the April announcement from Honda (NYSE:HMC) that it will invest C$15 billion to build a comprehensive EV value chain in Ontario, Canada.

The plans include an EV assembly plant and a standalone battery manufacturing facility. Joint ventures will add a cathode active material processing plant and a separator plant. The assembly plant aims to produce 240,000 vehicles annually, while the battery facility will have a capacity of 36 gigawatt hours.

Government funding supporting cobalt market growth

Due to its critical mineral designation, the cobalt sector has been the recipient of government funding.

In May, the US and Canada partnered for a co-investment to enhance the North American critical minerals supply chain. The collaboration will benefit Fortune Minerals (TSX:FT,OTCQB:FTMDF) and Lomiko Metals (TSXV:LMR,OTCQB:LMRMF), with the latter set to receive up to C$7.5 million from the Canadian government, matched by an additional US$6.4 million from the US Department of Defense’s Defense Production Act Investments Office.

The funding is part of the Canada-US Energy Transformation Task Force.

“Canada is positioning itself as a global leader in the supply of responsibly sourced critical minerals for the green and digital economy,” said Jonathan Wilkinson, Canada's minister of energy and natural resources.

“Through our work with the United States and other allies, we are developing secure critical minerals value chains that will power a prosperous and sustainable future," he added.

In August, Electra Battery Materials (TSXV:ELBM,NASDAQ:ELBM) secured a US$20 million grant from the US Department of Defense to aid in the construction and commissioning of “North America’s only cobalt sulfate refinery."

“Electra is committed to strengthening the resiliency of the North American battery supply chain,” said Electra CEO Trent Mell about the Ontario-based refinery. “We are grateful to the US Department of Defense for its support. On issues of national security, there are no borders between Canada and the United States. We are proud to partner with the US Government to build a strong North American supply chain for critical minerals.”

Cobalt catalysts to watch in 2025

Despite positive catalysts on the horizon, the cobalt market is facing immense pressure from substitution.

The shift toward LFP batteries, which omit cobalt, has drastically reduced demand in EV battery production.

By the third quarter of 2024, LFP batteries dominated 75.2 percent of the market, while nickel-manganese-cobalt batteries fell to 24.6 percent, according to data from S&P Global.

The declining role of cobalt in EV batteries was further highlighted in correspondence between China's CMOC (OTC Pink:CMCLF,SHA:603993), the world’s largest cobalt-mining company, and Bloomberg in late 2024.

“We predict that EV batteries will never return to the era that relies on cobalt,” said Zhou Xing, a spokesperson for CMOC. “Cobalt is far less important than imagined.”

However, even though cobalt's future in EVs looks clouded, demand persists in the consumer electronics segment, which relies on lithium-cobalt-oxide batteries, and in superalloys for aerospace and military applications.